In view of the absence of profit, your directors haves not recommended
any dividend for the year 2013-14.

Transfer to reserves

No transfer to reserves is proposed and accordingly the entire balance
available in the Profit and Loss Account is proposed to be carried to
Balance Sheet.

Company’s performance

Cement industry remained challenging during the year 2013-14 with
pricing pressures, weak demand and higher input costs. The undivided
Andhra Pradesh, a major market for your product, could not see any
revival in the construction activities due to economic slowdown caused
by uncertainties that had prevailed both in politics and in bureaucracy
on the eve of bifurcation of the state and the general election.

The performance of your company in terms of production and sale of
cement and average net sales realization per ton are given below:

Particulars 2013-14 2012-13

Cement Production in MTs 1419943 1587419

Cement Sales in MTs 1419857 1585003

Average Net Sales Realisation per MT (Rs.) 2608 2773

Total Revenue - Rs. In lakhs 50675 58454

Future outlook

It is fervently hoped that the division of Andhra Pradesh, into
Telangana and Andhra Pradesh, where new governments have since assumed
office would end the uncertainties and usher in era of all-round
development, This augurs well particularly for the cement industry, as
these Governments, in order to woo investors, are likely to announce
fresh incentives on new investments and expansions and also take up
more infra projects, housing and urban development. In fact, setting up
of a new capital for Andhra Pradesh alone may require infrastructure to
tune of anywhere around Rs 1 lakh crore. However, till such time, your
company may have to face the problems like rising input costs, higher
freight and distribution costs and low price realizations due to weak
demand. Your company therefore attaches greater importance to keep its
energy cost to the minimum by ensuring an optimum combination in the
consumption of imported and indigenous coal. As a long term measure,
your company proposes to set up a waste heat recovery plant to ease the
pressure on energy cost. Further, as you are aware, a railway siding
project is under implementation near your plant at Mattampally and it
is hoped that, barring unforeseen circumstances, the same would be
completed in the current year and this project would see the
optimization of the transportation cost and reduced dependence on road
transport apart from enabling your company to reach newer markets.
Taking an overall view of the above, your Board, is cautiously
optimistic about the future outlook for your company.

Joint Venture Company

As the shareholders are now aware, your Board has decided to exit from
the joint venture with Vicat Group and accordingly proposes to sell the
entire investment of 6,52,36,399 equity shares of Rs.10/- held by your
company in the joint venture company, Vicat Sagar Cement Private
Limited for a consideration of Rs.435 crores. Your company had invested
a sum of Rs.86 crores in the joint venture. Necessary approval for the
said decision of the Board is being sought from the shareholders
through postal ballot in accordance with Section 180(1)(a) of the
Companies Act, 2013. The result of this postal ballot is likely to be
announced on 20th August 2014. Your board hopes that the decision to
exit from the joint venture would enable your company to look for new
opportunities in the industry.

In accordance with Clause 49 of the Listing Agreement with the Stock
Exchanges, Corporate Governance Report for the period ended 31st March,
2014 with the auditors’ certificate thereon and the Management
Discussion and Analysis Report are attached to form part of this
report.

Internal Control Systems

Your Company has adequate internal control systems in all important
areas of its operations and effectiveness of these is periodically
reviewed for possible improvement in them.

Insurance

All the properties of the Company have been adequately insured.

Particulars of Employees

There were no employees as on 31.03.2014 whose details are required to
be furnished pursuant to Section 217 (2A) of the previous Companies
Act, 1956.

Industrial Relations

Your Company continues to enjoy cordial relationship with all its
personnel at the Plant, Office and on the field.

The particulars required under Section 217 (1) (e) of the Companies
Act, 1956 have been provided in the annexure, which forms part of the
Report.

Pollution Control

Your company is committed to keep the pollution at its plant within the
acceptable norms and as part of this commitment, it has an ESP system
at the plant.

Directors

Shri Gilbert Noel Claude Natta resigned from the Board with effect from
17.12.2013. Your Directors wish to place on record their deep sense of
appreciation of the invaluable contribution made by him during his
tenure as a Board member.

Dr.S.Anand Reddy, would be retiring by rotation at the ensuing Annual
General Meeting and seeking re-appointment. As of the date of this
report, Shri O.Swaminatha Reddy and Shri K.Thanu Pillai are independent
directors as per Clause 49 of the Listing Agreement and were appointed
under the Companies Act, 1956 as directors liabile to retire by
rotation. In order to give effect to the applicable provisions of
Section 149 and 152 of the Companies Act, 2013, it is proposed that
these Directors be appointed as Independent Directors, to hold office
for five consecutive years. Shri John-Eric Fernand Pascal Cesar
Bertrand, who was appointed in the casual vacancy caused by the
resignation of Shri Werner C.R.Poot would be holding the office upto
the ensuing Annual General Meeting, whereat it is proposed to appoint
him as a director liable to retire by rotation.

Sub Committees of the Board

The Board has Audit Committee, Nomination and Remuneration Committee,
Investment Committee and Investors’ Grievance Committee, the
composition and other details of which have been given in the Report on
the Corporate Governance forming part of the Annual Report.

Auditors

Messrs. P.Srinivasan & Co., Chartered Accountants, the present Auditors
of your Company hold their office up to the ensuing Annual General
Meeting and are eligible for re-appointment. In accordance with the
provisions of Section 139, 142 and other applicable provisions of the
Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014,
it is proposed to re-appoint them as the Auditors of the Company for a
period of three consecutive years commending from the conclusion of
this Annual General Meeting, until the conclusion of the 36th Annual
General Meeting in the calendar year 2017.

Directors’ Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, we state:

(i) that in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material developments;

(ii) that the directors had selected such accounting policies and
applied them consistently and made judgement and estimates that were
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
loss of the company for the period;

(iii) that the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;

(iv) that the directors had prepared the annual accounts on a going
concern basis.

Public Deposits

Your Company had not accepted any Deposits from the public and as such,
no amount on account of principal or interest on public deposits was
outstanding as on the date of the balance sheet.

Compliance Certificate

A certificate from the Auditors of the Company regarding compliance of
conditions of Corporate Governance as stipulated under Clause 49 of the
Listing Agreement is attached to this Report along with a report on
Corporate Governance.

Acknowledgement

Your Directors wish to place on record their appreciation of the
valuable co-operation extended to the Company by its bankers and
various authorities of the State and Central Government. They thank the
Distributors, Dealers, Consignment Agents, suppliers and other business
associates of your Company for their continued support. Your Board also
takes this opportunity to place on record its appreciation of the
contributions made by the employees at all levels and last but not
least, of the continued confidence reposed by you in the Management.

In the cement space, the counter of Sagar Cements comes into focus amid a rally of 12% rally shown by its stock post the cement company was seen setting the preferential share issue price at Rs 800/share

Investors are advised to remain invested in the stock of Sagar Cements with a target price of Rs 627 as the growth of the cement company is likely to be boosted ahead, given the company's plan to increase its cement capacity to 6 mt by FY18 coupled

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